Relationship Value, Trust And Supplier Retention In South African Automotive Supply Chains

Abstract

Suppliers have a particular role to play in assuring competitiveness in supply chains. This article investigates the relationship between first and second tier suppliers in automotive supply chains in South Africa. Automotive component suppliers (first tier suppliers to assemblers (OEMS) such as Toyota) should make an extra effort to retain their suppliers (second tier), particularly suppliers of strategic parts, to assure the best value adding by the suppliers in the highly competitive supply chain landscape. To assure best value from suppliers they need to be retained in an active trusting, long term, collaborative relationship.  The more the customer trusts the supplier, the higher the perceived value of the relationship and the more likely parties will work together to retain the business relationship. The aim of this quantitative study amongst first tier suppliers is to obtain more insight into the relationships and the hierarchical correlation between the relationship value, trust and supplier retention in automotive supply chains in South Africa. With a regression analysis it was found that both trust and relationship value are substantial predictors of supplier retention, but trust is more important for supplier retention.